| Here's some news; Federal Reserve Chairmen are | | | | opting to cut the discount rate, instead of the Fed |
| men that move markets. Are you surprised? Well, | | | | Funds benchmark, on Aug. 17th was significant |
| apparently the press just learned that secret this | | | | because confidence had deteriorated with the slump in |
| week. There has been non-stop reporting of the media | | | | assets tied to subprime mortgages. Many considered |
| laying claims as to who is the more influential market | | | | this a shrewd move because it injected liquidity into a |
| mover--the former Fed Chairman Alan Greenspan or | | | | tight market without seemingly bailing out Wall Street's |
| current Fed Chief Ben Bernanke. As if the top two | | | | high rollers. |
| dogs were going to contend in a 15 round bout to | | | | Now, after weeks of water-cooler gossip and rumor, |
| determine once and for all who is "The Market Mover" | | | | the Federal Reserve reduced its benchmark rate by |
| champion. | | | | half a percentage point, to 4.75%. This marked the first |
| Reading through the financial papers, the media would | | | | decrease in U.S. interest rates in four years. Along with |
| have you believe Mr. Greenspan is that guy and Dr. | | | | that unpredicted policy adjustment, the Fed again cut |
| Bernanke is the challenger. Try your hand at | | | | the discount rate a half percentage point to 5.25 |
| determining who is the current top market | | | | percent. |
| prognosticator. | | | | As a result, the Dow's increase marked its biggest |
| There is a good role model to follow and he gave | | | | one-day leap since Oct. 15, 2002 and its largest |
| some ingenious clues of what to look for. President | | | | percentage gain since April 2, 2003. The broader |
| Harry Truman had it right, "Give me a one-handed | | | | indexes also climbed, with the Standard & Poor's |
| economist! All my economist say, ''On the one hand... | | | | 500 index up 2.9 percent, and the Nasdaq composite |
| on the other.'' In a week where the nation's two most | | | | index up 2.7 percent, ending at 2,651. |
| renowned economist were the gossip in the financial | | | | Finally, the Central Bank gave Wall Street what it's |
| press, whose hand should be raised and deemed best | | | | been clamoring for by cutting Federal Funds interest |
| for you listen to? | | | | rates by even more than nearly all analysts had |
| In this corner, the former Head Banker took the gloves | | | | predicted. |
| off. He came out swinging causing all kinds of | | | | Actually, according to a Bloomberg News survey only |
| controversy throughout the news. First off, many | | | | 29 of 105 anticipated such a move. In fact, most |
| question Alan Greenspan's timing of the release of his | | | | analysts predicted a smaller cut after Bernanke |
| new book "The Age of Turbulence: Adventures in a | | | | warned in a previous speech that investors must |
| New World" during the same week as the FOMC | | | | acknowledge their losses. ``It is not the responsibility of |
| meeting. Greenspan has paraded throughout the week | | | | the Federal Reserve - nor would it be appropriate - to |
| appearing on numerous news shows and book signing | | | | protect lenders and investors from the consequences |
| parties. Since when does an economist transform his | | | | of their financial decisions,'' he said. That differs from |
| financial gibberish and mannerism's into Oprah-like | | | | the currently Fed report citing that it ``will act as |
| charm and Will Rodgers wit? Remember the term | | | | needed to foster price stability and sustainable |
| "Fed Speak" anyone? | | | | economic growth.'' |
| Well if that's your priority to learn about the musings | | | | So has Bernanke grown out of that propellerhead hat |
| and interpretations of what made Greenspan tick, | | | | yet? ``It is a bold step that is going to start to calm |
| there is his hand. Before you get ahead of yourself | | | | financial markets'' remarked Chris Rupkey, chief |
| and put Greenspan's mug on Mount Rushmore, ask | | | | financial economist at Bank of Tokyo- Mitsubishi UFJ |
| yourself what did he really do? | | | | Ltd. in New York and that, ``FOMC now stands for |
| Twenty years ago, there was an economic | | | | Friend of Market Committee.'' |
| circumstance brewing in the markets. Anyone recall | | | | Even Jim Crammer is on board with the Fed Chief |
| Black Monday? Although he was just appointed in | | | | now. He proclaimed after the FOMC meeting "Ben |
| August of 1987, did Greenspan pre-empt those | | | | Bernanke is now his friend" and actually replaced the |
| circumstances or react to them? | | | | "they know nothing button" from his Cramerica |
| Who could forget the Long-Term Capital Management | | | | machine and with "they know something." He also |
| debacle, did Greenspan act or react to that situation? | | | | tossed a fan favorite prop, the rice box with Bernake's |
| Chairman Greenspan commented before the House | | | | picture on it. |
| Banking Committee, "a failure of LTCM's failure could | | | | He went on the further claim "they finally got it right." |
| have caused substantial damage to banks and | | | | Cramer did a complete one-eighty and summarized |
| investors and might have impaired the economies of | | | | "Home and job are more important right now than |
| many nations, including the United States." How many | | | | inflation." Jim even talked of "A Bernanke celebration |
| "moral hazard" charges were cried for that action? | | | | portfolio." |
| Then there was the "Irrational Exuberance" jargon and | | | | Larry Kudow had kudos for Bananke for implementing |
| the Bubble. Alan called that one too and acted | | | | a "fed shock and awe policy" and dedicated his show |
| miraculously. How long did Greenspan buy into the | | | | as celebrating "Ben Bernake's coming-out party." He |
| notion of the productivity gains of the "New Economy" | | | | went on to say, "A lot of traders called me today to |
| when interpreting the economic statistics? How | | | | say the Fed Chair Bernanke regained the faith of Wall |
| effective was Greenspan's prescription to raise | | | | Street and market confidence has increased |
| interest rates six times from 1999 -2000 ... did that | | | | enormously." Larry then stated, "Bernanke's coming out |
| proactive Fed action impact the economy in a positive | | | | party just trumped Greenspan coming out with his |
| manner? | | | | new book." |
| Finally, the next situation Greenspan warned of - the | | | | Wayne Angel, a former Fed Governor, said he "Likes |
| "Housing Bubble" or the fear of "Irrational Exuberance | | | | Bernanke as Chainman, and why I'm delighted so much |
| Par Deux" continuously throughout the end of his | | | | and that he has raised his level of esteem, so that |
| tenure. Who was manning the ship at the Fed when | | | | now I want to see him reappointed when his four year |
| interest rates were at historic lows and allowing lending | | | | term is up." |
| institutions the ability to offer the "subprime mortgages" | | | | So who is the market maestro now? |
| with attractive teaser rates? | | | | A commonality of each man is that they both were |
| Maria Batriromo's exclusive CNBC interview | | | | very gifted musicians at one point in their life. Actually, |
| "Greenspan: Power, Money & The American | | | | it's ironic that they both played a single reed woodwind |
| Dream" debuted on September 17th the day before | | | | instrument. Alan played the Clarinet and Ben the |
| the Federal Open Market Committee (FOMC) meeting. | | | | Saxophone. |
| Is this another example of Greenspan trying to one up | | | | Who's style jazzed the market best? Bernanke's Fed |
| the Bernanke at the FOMC's meeting the next day to | | | | will use the actual scheduled FOMC meeting to |
| conduct policy business? | | | | conduct Fed business verses Greenspan's occasional |
| Now on the other hand, market gurus have been very | | | | behind the scenes quick moves with conference calls |
| skeptical of the rookie status of the current Chairman's | | | | to initiate policy. On one hand, we have no more |
| ability to grasp the "real world" nuances of the market. | | | | obfuscation Fed speak while commenting in public or |
| Jim Crammer's "they know nothing" tirade heard | | | | ridiculous briefcase indicators to signify what secret |
| around the world, also known now as the infamous | | | | action may arise. On the other hand, we have an |
| "Erin Burnett's Giraffe Dress Interview," fell on deaf | | | | academic style of analyzing current facts with a |
| ears at the Federal Reserve for weeks. | | | | friendlier open-door communication policy and |
| Ben Bernanke's academic propeller-head persona | | | | conducting its business at scheduled times. Which hand |
| began to transform into a Market Wizard by | | | | is the "right" one? |
| tampering with the long forgotten discount window. His | | | | |